Domestic solar market continues to struggle despite 40% rebound

Solar installations under the new tri-monthly degression model are continuing to struggle.

The latest weekly solar installation figures show that the domestic-scale solar market is continuing to struggle. Installations in September and October averaged around 1,767 a week, however, when a number of feed-in tariff levels were degressed by 3.5% at the beginning of November, the installation rate plummeted by 72.9% to just 841 registered installs for the week ending 11 November.

The steep drop in installation rates will not come as a surprise to many in the industry, as installation rates have always experienced a dramatic tail off following the downward revision of tariffs. However, the severity of the drop has caught many industry players by surprise considering that the headline 0-4kWp FiT figure was only cut by just over half a pence.

This week’s provisional figures for the week ending 18 November show that the installation rate has rebounded by 40% to stand at 1,180 installs. The 0-50kW category continues to be dominated by the lowest capacity band, with 96.9% of installations registered between 0-4kWp.

Commenting on the latest figures, Ray Noble, solar specialist for the Solar Trade Association (STA) told Solar Power Portal that the fall off in demand following the FiT was not a shock as “most installers squeeze in potential orders before the deadline to take advantage of the slightly higher FiT rate.”

As for future installation rates, Noble predicted that industry will continue to see slow growth, stating: “I think we will continue to see installation rates creep upwards but they won’t do much until after Christmas.”

Noble called on government to help make a concerted push to drive demand back to previous levels in the new year, stating: “Heading into next year the general public will have most likely forgotten about the past challenges of the solar industry. If government can help the market by getting out the right message – that the cost of solar has fallen in line with the feed-in tariff rate – than industry can settle and build for the future.”

Noble believes that industry and DECC should be aiming to achieve around 6,000 installs a week come spring next year. Noble explained: “The industry has the capability of 6,000 installs a week. We need to find a mechanism to develop that market.”

Another alarming trend identified by the figures is the continued poor performance of the 10-50kW capacity band. Since 4 November, only 16 installations a week have been registered on the central system; combined with the complete standstill of the 250kW-5MW market, a significant section of one of solar’s most suitable markets is seriously underperforming.

Earlier this week, the STA called on government to address the current standstill of the mid-sized non-domestic market following zero installations in the category since July. Noble is clear where the blame for the lack of demand lies: “A FiT rate of 7.1p for 250kW-5MW is incorrect and needs to be put right.”

The STA has been vocal in its recommendation that the FiT mechanism is the most suitable to support this market. However, in order to address the problem now, Noble suggests that DECC could introduce a separate RO band for ground-mounted solar and a higher band for rooftop-mounted solar.

DECC is currently considering responses to its consultation over the decision to drop support for solar under the RO to 1.5ROCs – a move seen by many in the industry as too severe.

What are your thoughts on the latest installation figures? Will the domestic market ever bounce back to levels seen previously? What should be done to address the 250kW-5MW market? Let us know in the comments.

I bow to nobody in my conviction that government's can do crazy and stupid things. And having occasionally worked with government departments, one should never rule out total incompetence as a cause of a cockup.

But the wider point here isn't the minutiae of how the solar subsidy reduction was done.It is the observation that when the subsidy was reduced, your product became unsaleable and the market collapsed. One does not need to be Holmes or Poirot to deduce that the subsidy was what was driving your 'industry', not the benefits of your technology.

BTW - arguing, as you do - that other government expenditure is even more stupid than solar subsidies so you should be allowed to continue is no more than the old playground excuse of 'But Mummy the big boys do it too'. It was dumb when you were 8yo, and it is still dumb now. Surely you can do better.

Posted by Latimer Alder on 2012-12-03 09:56:49

PS

Some cite the UK's reduced rate of VAT on energy as an example of a 'subsidy' to the coal and gas industries..

This is not the case. VAT is a sales tax and is paid by the end consumers, not the producers (who just do the collection). And it applies equally to all forms of energy - 'renewables' included.

Posted by Latimer Alder on 2012-12-03 09:48:25

I do 'do my research'. But I wonder if others do too.

Many people on this forum tell me that there are big subsidies for coal and gas. But nobody so far has been able to supply any details when I ask. And I've not been able to find much evidence in my own research.

Will you be the exception? Can you tell me exactly what these subsidies are, how they are paid, who receive them and how much they total in the last few years?

It is easy enough to do so for wind and solar....surely the same should be true for coal and gas.

Posted by Latimer Alder on 2012-12-03 09:45:15

wow and you think pv is the only thing subsidized think about coal gas and nuclear if these where not subsidized we would all be in the dark, do your research

Posted by bob on 2012-12-01 21:42:09

Couldn't agree more, win win situation.

Posted by Andy Blunt on 2012-11-29 11:17:29

Does anyone else think that a simple solution to get the market going again would be to increase the rate and cut the term? An example would be to raise the 4kWp rate to 28p and cut the term to 10 years. This would be a win/win for everyone as the total cost to the tax payer would be significantly lower and the consumer would have their investment repaid more quickly. Similar uplifts would apply to each band of the FiT. My own market research backs this up as every potential customer I have put this to says they would be quite happy with a 10 year term. I believe that this would have an immediate impact on the industry and get us back on course for Mr Barker's 2020 target. Is this something we should lobby for?

Posted by Laurence Hughston on 2012-11-28 09:45:03

No Mr.Alder. The industry quickly melted down when the UK Government broke the law. Subsidies are de facto e.g. Welfare State, NHS, Education, Defence, Energy, Transport, Foreign Aid, Justice, etc. It's called Government expenditure which is determined from taxation with the consistent shortfall borrowed from investment banks who are licensed to acquire Government Gilts and Bonds. This expenditure is then determined by Government Departments under the constant scrutiny of HM Treasury but when Government Departments foul up and the independant judiciary confirms that to be the case, then Joe Public tends to distrust the relative Government offer on the table even more than it is naturally inclined to do leading to inevitable melt down ! Simple as that really. The Welfare State subsidy is eye-watering. Wasted Defence expenditure not far behind (e.g. destruction of £5 billion worth of Nimrod aircraft a couple of years ago). The Solar PV subsidy was loose change in comparison particularly given the size of the levilisation fund in play for other renewable energies and should have run its course to 31st March 2012 then lowered accordingly with say a minimum of six months prior notice. The main reason for DECC and HM Treasury panic was unforeseen consumer capital return jealousy at the time but sometimes Government should see the bigger picture and honour the original deal as taxation losses from the Solar PV sector as companies fail, will now likely far outweigh what it would have cost to have seen the original deal through and on that point I rest my case.

Posted by Seamus on 2012-11-26 11:24:45

So the 'industry' melts down when the eye-wateringly large subsidies are removed.

Good.

The stupidity is that it they - and it - ever existed in the first place.

Posted by Latimer Alder on 2012-11-25 12:02:49

Couldn't agree more with you Seamus. Well said

Posted by 1st 4 Solar on 2012-11-23 23:59:40

This time last year Solar PV was booming with DECC praying for this year's sort of weather whilst blissfully ignoring the warnings that their 12th December 2011 "Reference Date" was unlawful. I can still see the smirk on Barker's face as he endorsed DECC's great idea to welch on the opening Feed-in Tariff deal set to run until 31st March 2012. DECC instantly destroyed the vital ingredient called consumer confidence. In turn acting unlawfully then destroyed the UK Solar PV industry at both domestic and commercial levels. This is now best reflected in the total standstill at + 250 kWp. No one will commit finance whilst uncertainty prevails in ROC's and on the other side of the Solar PV coin, 1,000 or so small scale installs a week won't keep 4,000+ MCS registered installers in business. A very expensive shambles and Barker's cronies deserve to be hauled before the High Court next year. Just a pity they won't be shelling out the damages from their own pockets.

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